Current Expected Credit Loss Standard for ALLL (CECL)

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The Financial Accounting Standards Board’s Current Expected Credit Loss impairment standard – which requires “life of loan” estimates of losses to be recorded for unimpaired loans at origination or purchase -- poses significant compliance and operational challenges for banks. Issued in June 2016, and set to take effect in 2020 for SEC registrants (2021 for all other banks), the new standard represents the most sweeping change to bank accounting ever.​

ABA Position

CECL poses a significant challenge for the banking industry. The life of loan loss concept presents complexities that can decrease capital, and add both volatility to ALLL estimates and additional costs. Further, it has the potential to change how banks do business. Now that the CECL standard is issued, ABA is committed to working with bankers, regulators, auditors, and investors in ensuring that banks can implement CECL the right way, not only at the effective date, but well into the future. ABA urges bankers to educate their investors, board members, and management about CECL. Please refer to the video above and to the ABA Resources listed at the side.